Final Results

ABERFORTH SMALLER COMPANIES TRUST plc

Audited Final Results for the year to 31 December 2008

The following is an extract from the Company's Annual Report and Accounts for
the year to 31 December 2008. The Annual Report is expected to be posted to
shareholders on 30 January 2009.  Members of the public may obtain copies from
Aberforth Partners LLP, 14 Melville Street, Edinburgh EH3 7NS or from its
website at www.aberforth.co.uk. This will shortly be available for inspection
at the authority's document viewing facility at 25 The North Colonnade, Canary
Wharf, London, E14 5HS.

FEATURES

Net Asset Value Total Return                 -39.6%
Benchmark Index Total Return                 -40.8%
Increase in Dividends per Ordinary Share     +25.0%

The objective of Aberforth Smaller Companies Trust plc (ASCoT) is to achieve a
net asset value total return (with dividends reinvested) greater than on the
Hoare Govett Smaller Companies Index (Excluding Investment Companies) over the
long term. ASCoT is managed by Aberforth Partners LLP.


CHAIRMAN'S STATEMENT TO SHAREHOLDERS

REVIEW OF 2008 PERFORMANCE

Last year I reflected on how difficult 2007 had been for small company share
prices. The year to 31 December 2008 has proved even more challenging with the
obvious stresses in the financial system generating a sharp slow down in the
global economy. Global equity markets have fallen significantly. Reflecting
this, Aberforth Smaller Companies Trust plc (ASCoT) produced a negative total
return of 39.6%, compared with a negative total return of 40.8% for the Hoare
Govett Smaller Companies Index (Excluding Investment Companies), your
Company's investment benchmark. Larger companies, as represented by the FTSE
All-Share Index, registered a negative total return of 29.9%.

Your Managers' Report provides greater insight into ASCoT's performance,
including that of small and large companies.


GEARING

In my Half Yearly Report I commented on the significant and rapid adjustment
to valuations that had taken place between the stock market peak (around May
2007 for small companies) and the middle of 2008. At that time your Managers
had begun to employ a modest level of borrowing to gear the portfolio, ever
conscious that timing "the bottom" of the market with accuracy is near
impossible. Although valuations have continued to decline since the decision
was made, your Board and Managers believe that the introduction of gearing
will be beneficial in the longer term.

At the year end the level of gearing was 109.5%. Your Board and Managers
review the level of gearing regularly and, whilst subject to many factors, it
is likely that gearing will increase slowly from its current level.


DIVIDENDS

Your Board is pleased to declare a second interim dividend, in effect a final
dividend, of 13.0 pence per share, which produces total dividends for the year
of 19.0 pence per share representing an increase of 25.0% on the total for the
previous year.

The increase year-on-year reflects good underlying growth in dividends from
ASCoT's portfolio particularly in the first half of the year; the beneficial
impact of gearing on the revenue account; and the non-recurring recovery of
VAT and associated interest.

It is very unlikely that dividend growth from the portfolio in 2009 will be as
good as it has been in the past year. The near term outlook for corporate
dividends is increasingly challenging. Indeed, many financial commentators are
of the view that, in aggregate, UK dividends will fall in 2009.

In this context, the Board does have a degree of flexibility given the level
of the Company's revenue reserves which, after adjusting for payment of the
second interim dividend, amount to 26.9 pence per share.

The second interim dividend of 13.0 pence per share will be paid on 27
February 2009 to Shareholders on the register at the close of business on 6
February 2009. The last date for submission of Forms of Election for those
Shareholders wishing to participate in ASCoT's Dividend Reinvestment Plan
(DRiP) is 6 February 2009. Details of the DRiP are available from Aberforth
Partners LLP on request or from their website, www.aberforth.co.uk.


VALUE ADDED TAX (VAT)

Shareholders will recall from previous reports that VAT is no longer imposed
on management fees and that your Board had reached agreement with your
Managers for recovery of all VAT paid by ASCoT since 2001 plus any sums
recovered by your Managers from HMRC in relation to earlier periods.

As reported in the Half Yearly Report, a total of £6.4 million has been
received in the last two years, comprising £5.4 million of VAT plus associated
interest of £1.0 million. This represents a very satisfactory outcome to date
for Shareholders.

Any further recovery is subject to various legal cases, the outcome and timing
of which remain uncertain at this stage. Whilst ASCoT is not directly involved
in these cases, your Managers continue to monitor developments in this regard.


CONTINUATION VOTE

At the Annual General Meeting held on 4 March 2008, Shareholders passed all
the resolutions. Of particular note was the resolution, proposed every three
years, that ASCoT should continue as an investment trust.


SHARE BUY BACK AUTHORITY AND TREASURY SHARES

At the same Annual General Meeting, the authority to buy-in up to 14.99% of
ASCoT's Ordinary Shares was renewed. Under that authority 1,909,788 shares
have been bought in to the end of December at a total cost of £11.1 million.
All shares bought in have been cancelled rather than held in treasury. Shares
bought in to date have enhanced ASCoT's net asset value by approximately £2.2
million by virtue of the weighted average discount on purchases being 16.2%.

Your Board will be seeking a renewal of this authority at the Annual General
Meeting to be held on 4 March 2009. Your Board keeps under careful review the
circumstances under which the buy-in authority is used in the context of its
overall objective of seeking to sustain a low discount. It is your Board's
policy to cancel, rather than hold in treasury, any such shares.


SUMMARY AND OUTLOOK

2008 has been a very difficult year for UK smaller companies with a steep
decline in the level of their share prices. If ever a reminder was needed that
equity investment requires a long term perspective it has been given to us in
this last year. Whilst it would be folly to suggest that there is no further
pain to come, your Managers are of the view that UK small company equities
currently represent attractive value. Your Board remains confident that the
Managers' experience and consistency of approach will benefit the Company in
these difficult times.

David R Shaw
Chairman
27 January 2009


MANAGERS' REPORT

PERFORMANCE
The total return of ASCoT's benchmark, the HGSC (XIC), was negative 40.8% in
2008.  This was the second worst result in nominal terms over the index's 54
year history.  The FTSE All-Share performed less poorly but nevertheless
experienced a negative total return of 29.9%.  Against this background of
extremely weak equity markets, ASCoT's modest gearing position proved
unhelpful: its total return was negative 39.6%, slightly ahead of the
benchmark.  The performance at the investment portfolio level, after costs but
excluding the effect of the gearing, was better, with a decline of 37.8%.

Recent stockmarket weakness has been so severe that the FTSE All-Share has now
registered a total return of just 12.4% cumulatively over the past ten years,
a negative outcome in real terms.  Small companies have performed rather more
respectably, with a 61.5% return over the same period, while ASCoT's total
return has been 153.4%.


INVESTMENT BACKGROUND
Last year's horrible performance from equities was not confined to the UK.
Stockmarkets around the world declined precipitously, with 50% drops not
uncommon in both established and emerging markets.  Nor was the weakness of
these returns confined to equities: any asset class perceived as risky
suffered in 2008 as the credit markets moved from crunch to crisis.  By
default, as it were, government debt has been the beneficiary of such extreme
risk aversion: in the US, treasury bill yields have at times dropped below
zero and ten year government bonds ended the year yielding close to 2%.  And,
of course, bank deposits were caught up in the maelstrom: at certain points
through the year, equities certainly looked a less risky proposition.

After the relative calm of the first half of the year, the credit crisis
intensified in the third quarter.  The process of de-leveraging, which started
over a year ago when US subprime problems were exposed, gathered pace and was
punctuated by large downward lurches.  Of these, the most spectacular and deep-
reaching was the failure of Lehman, which brought home the reality of
counterparty risk.  The reluctance or inability of the banks to make new loans
was obvious in extended spreads between LIBOR and base rates.  The consequent
dearth of funding compromised what has become known as the `shadow-banking
system', which is the complex of hedge funds, prime brokers, money market
funds and securitisation markets that facilitated the build-up of debt in
Western economies over recent years.  The forced unwinding of leveraged
investment positions has intensified the cycle of de-leveraging that is at the
heart of the credit crisis.

Meanwhile, real economic conditions deteriorated through the year, to the
extent that recession is with us, whether officially as in the US and Germany
or de facto as in the UK.  Housing has been the principal transmission
mechanism of credit market problems to the real economy.  On both sides of the
Atlantic, falling house prices, together with the difficulty in securing new
mortgage financing, have tempered consumers' willingness to spend, while
rampant commodity prices earlier in the year eroded disposable income.
Additional pressure is coming from rising unemployment, with many large
redundancy programmes making the headlines towards the end of the year as
businesses, particularly those close to the troubled automotive industry,
adjusted to the environment of weaker demand.

Importantly, however, some relief was forthcoming later in the year from the
remarkable reversal in fortune for commodities.  Built on hopes that the
emerging world could decouple from Western economies and continue to grow
through internally generated demand, the prices of commodities, together with
the share prices of the companies exploiting them, reached extravagant levels
earlier in the year.  These hopes were undermined as it became clear that the
ructions in credit markets would feed back to affect real economic activity
and that the `China phenomenon' depended substantially on Western,
predominantly American, spending.  The extraordinary journey of the oil price,
which rose by almost 51% in the first half before plummeting to end 54% down
for the year, is illustrative of the wider commodity arena.

With the bursting of this latest bubble, the concern about stagflation that
was so prevalent less than six months ago has vanished.  Expectations for
inflation have hurtled downwards: at the end of June, the difference between
ten year conventional and index linked gilt yields - a proxy for anticipated
inflation - was over 4%; by the end of the year, this had dropped to almost
1.5%.  Similar movements are observable in the US and European bond markets.
With the stagflationary chimaera exposed, financial markets are again
confronted by deflation, with which they last flirted six years ago.  The Bank
of England's November inflation report introduced the prospect of CPI
inflation dropping into negative territory at some time in 2009, having been
running at over 5% in the third quarter, as the commodities boom works its way
out of the system.  So, the Chancellor may be receiving more letters in 2009,
albeit rather different in tone.

Relenting inflationary pressures have afforded monetary authorities, even the
ECB, the excuse to cut interest rates, though, given the disinflationary
nature of the de-leveraging process and of recession itself, such an excuse
was hardly required.  In December, the Fed took US rates to zero.  Meanwhile,
UK base rates ended the year at 2% and early in 2009 were cut again to 1.5%,
their lowest level since the foundation of the Bank of England.  It is worth
remembering that at the half year futures markets were anticipating a rise by
the year end from the then prevailing level of 5%.  As interest rates approach
zero, other remedial measures have been deployed by monetary and fiscal
authorities.  Echoing Ben Bernanke's speeches back in 2002, these
unconventional steps include public ownership of swathes of the financial
system and the extension of the range of collateral accepted by the central
banks.  Most significantly, as the year drew to a close the Fed confirmed that
it had embraced `quantitative easing', which is the expansion of the central
bank's balance sheet and thus of money supply.  The newly printed money is to
be used to purchase government debt together with mortgage and other consumer
loans.  These various actions have had some success in bringing interbank
rates to levels more consistent with prevailing base rates, though they have
yet to filter through the extended credit market.

Such measures nevertheless risk encountering the phenomenon of `pushing on a
string': deluged by cheap money, banks may opt to repair balance sheets rather
than lend; similarly, consumers may prefer saving over spending.  In order to
deal with this conflict of individual rationality and the collective `good',
governments are stepping up to play their part, with half an eye to the
political capital apparently available from playing `my TARP's bigger than
yours'. In the UK, a combination of partial or full nationalisations, tax cuts
and a commitment to government spending programmes has seen projections for
public sector borrowing rise to around 8% of GDP over the next year or so. The
consequent probability of rising gilt issuance must exert an upwards drag on
gilt yields, though this has so far been overwhelmed by the flight to safety.
So far, the more tangible effects of the UK's difficult economic circumstances
have been sterling's falls of 26% and 23% against the dollar and euro
respectively over the course of 2008.

INVESTMENT PERFORMANCE
Against this background of stress in the real economy, dysfunctional credit
markets and general risk aversion, the share prices of small companies
struggled.  As already noted, the HGSC (XIC)'s total return of negative 40.8%
was the second worst since its inception in 1955.  With the FTSE All-Share's
29.9% decline, large companies fared relatively well: a much greater exposure
than their smaller peers to the high-profile casualties in banks and
commodities was offset by the benefit of higher weightings in resilient parts
of the market such as utilities and pharmaceutical companies.

The subsequent paragraphs, together with the table, provide an analysis of
ASCoT's relative performance.

· The weakness within the small company universe was widespread: the HGSC
  (XIC) entered 2008 with 509 constituents; of those, only 68 managed a positive
  total return in 2008.  In order to achieve this feat, it helped to be on the
  receiving end of M&A activity: 34 of these companies received bids, mostly in
  the first half of the year before credit markets seized up in the third quarter.
  ASCoT, which entered the year with 100 companies in its portfolio, had holdings
  in 18 of the 68 companies noted above.  Benefiting from active management, it
  had holdings in another nine companies that achieved a positive total return.
  As described in greater detail below, ASCoT did well from M&A activity.


PERFORMANCE ATTRIBUTION ANALYSIS

12 Months to 31 December 2008

                                                     Basis
                                                    Points

Stock Selection                                         23
Sector Selection                                       350
                                                      ----
Attributable to the portfolio of investments           373
(calculated on a mid-price basis)
Impact of mid-price to bid-price                       (32)
Purchase of Ordinary Shares                             29
Cash/gearing                                          (186)
Management Fee charged (net of the VAT refund)         (59)
Other expenses                                          (7)
                                                      ----
Total Attribution                                      118

Note: 100 basis points = 1%.  Total attribution is the difference
between the total return of the net asset value and the Benchmark
Index (i.e. net asset value = -39.65%; Benchmark Index = -40.83%;
difference is 1.18% being 118 basis points).


· The negative returns from equities in 2008 clearly formed an unfavourable
  backdrop for a geared investment trust.  A precise quantification of the drag to
  ASCoT's relative performance from its gearing is given in the `Cash/gearing'
  line in the preceding table.  From a very short term viewpoint, the utilisation
  of even a modest amount of debt may be considered ill-timed.  However, your
  Managers contend that decision should be assessed over a longer period of time
  and within the context of their value investment philosophy.  By the late second
  quarter, small companies' valuations were already at levels that appeared
  attractive in relation to their own history, to large companies and to bonds.
  At that stage, your Managers were already anticipating a decline in earnings,
  consistent with a recession, but believed that much of this had already been
  built into valuations.  However, through the second half of the year, the
  fundamental outlook has seen further deterioration and prices have adjusted
  further.  The valuations now on offer are examined in detail in the `Investment
  Outlook' section of this report.

· Stock selection made a small positive contribution, though this was
  overshadowed by a strong showing from sector selection to produce ASCoT's
  overall out-performance at the portfolio level.  Your Managers have not given up
  on their fundamentally driven, bottom-up approach to investment!  Behind the
  contribution from sector selection was a large under-weight position in the
  commodities sectors (Industrial Metals, Mining and Oil & Gas), which performed
  extremely poorly.  Within the small company universe, the constituents of these
  sectors are typically involved in exploration and development of resources and,
  consequently, seldom generate cash.  This positioning was motivated less by an
  insight into the commodities prices themselves, which would have been a top-down
  consideration, than by the lofty valuations of the individual stocks on offer
  within these sectors.  These stocks were frequently priced for an improbable
  rate of exploration success, on top of some potentially heroic assumptions about
  the underlying commodity price.  So, this positioning is essentially driven by
  bottom-up considerations, although the attribution calculation drags most of the
  benefit into sector selection.

· At the interim stage, the portfolio's bias to businesses with overseas
  profit streams was noted.  This proved advantageous, but the benefit was
  substantially confined to the first half.  Through the third quarter, the logic
  was undermined as it became clear that the implications of the credit crisis
  were not confined to the US and UK: the global economy, if not entering
  recession, is at least undergoing a meaningful deceleration.  The problems
  facing the capital goods arena were highlighted by a spate of trading statements
  from companies around the world that warned of an extremely sharp contraction in
  demand in the fourth quarter.  From the portfolio's point of view, the
  valuations of its capital goods holdings in many cases appear already to be
  discounting a sharp decline in profits.  However, at the margin, your Managers
  have been tilting the portfolio back towards the domestic economy, adding to
  holdings in the Media, Household Goods, Construction & Materials and General
  Retailers sectors.  Behind this shift, which has been undertaken tentatively,
  are the low valuations of businesses within these sectors together with a
  contention that these businesses will be among the first to see a pick-up in
  profitability, when the recovery comes.

· In a diversified collection of small companies, it is inevitable that
  during recession some will see their profitability decline to a level that will
  challenge banking covenants.  Reflecting this risk, the portfolio retains the
  bias to companies with strong balance sheets that was noted in the interim
  report.  This defensive positioning, which is influenced by the parlous state of
  the credit markets, has been beneficial to ASCoT's performance and remains very
  much in place: 34% of the portfolio is invested in companies with net cash on
  their balance sheets; at the other extreme, 9% of the portfolio sits in
  companies whose net debt to EBITDA ratios exceed three times.  Where net debt is
  a feature, the current emphasis is on the tenure of funding from the banks,
  rather than the interest rate margin payable over LIBOR.  Margins have been
  rising extravagantly as banks seek to restore their own profitability: 100 basis
  points a year ago might now be 300 basis points.  The alternative to accepting
  these new terms would be worse for shareholders.

· As already noted, M&A activity was prevalent in the first half of the year
  but tailed off substantially in the second.  The credit markets in effect closed
  during the third quarter and those companies with sufficiently strong balance
  sheets to contemplate acquisitions are often being discouraged from doing so for
  the time being by investors, your Managers included.  Therefore, with rescue
  rights issues becoming common, de-equitisation, which describes the replacement
  of equity financing with debt financing and which has provided an underpinning
  to UK equity valuations in recent years, has run out of steam.  ASCoT benefited
  from the completion of nine bids for its holdings over the year, though all
  those were completed before October's turmoil.  Exit valuations were on the
  whole high, typically over 15x EV/EBIT, though trended downwards as the year
  wore on.  Two holdings received bids in the second half; these had yet to
  complete at the year end.  As an indication of the change in attitudes, ten
  companies within the portfolio received approaches through the year but
  subsequently saw the talks ended.

· As described in the `Investment Outlook' section of this report, your
  Managers believe that dividend yield will make a crucial contribution to
  forthcoming equity returns.  Despite last year's deteriorating trading
  environment and rising uncertainty, the dividend payments from ASCoT's
  investments were robust.  Of ASCoT's 93 holdings at the year end, it was the
  policy of 15 not to pay a dividend, while another two had started paying a
  dividend only in 2008, rendering year on year comparisons meaningless.  Of the
  remaining 76, nine cut their dividends, a further seven held them unchanged and
  60 reported increases.  The median company within the 76 raised its dividend
  payment by 10%.  This rate of growth is considerably ahead of that achieved by
  UK equities over the longer term and given present economic challenges is
  extremely unlikely to be sustained in 2009.  It should be noted that the median
  figure does not necessarily reflect ASCoT's actual receipts, since the portfolio
  is actively managed and a specific rate of dividend growth is not targeted.


INVESTMENT OUTLOOK
Coming out of a year of wrenching declines in equity prices, it is difficult
but necessary to take a step back in order to survey the opportunity base with
a degree of objectivity.  The easiest observation to make is that the de-
leveraging process has to continue and that the present recession is,
regrettably, an essential part of it.  Trading conditions are therefore set to
worsen in 2009, and it will take time for banks to repair their balance sheets
and pass on the benefit of lower interest rates to the private sector.
Despite the fillip of a weak sterling, profits will therefore fall.  A decline
of at least 40% is not out of the question, which would put the present
downturn roughly on a par with that of the early 1990s.

Gloomier scenarios are being painted by some commentators, with a replay of
the 1930s depression sometimes cited.  Given the extraordinary breadth and
depth of remedial actions taken by monetary and fiscal authorities, your
Managers suspect that a re-run of the deflationary 1930s is unlikely.
However, this is not to say that policy errors have not been made: for
example, a different sleuth of bears reckons that the extreme monetary easing
is foisting a substantial inflation problem in the future, which would
conveniently erode the present burden of debt and ask serious questions of
currently very low government bond yields.  At the very least, it would seem
sensible to expect lower returns on equity in the future in an environment of
scarcer debt funding, greater regulation and, eventually, higher taxes.

Profits probably commenced their decline in the second half of 2008.  It will
in all likelihood not fit conveniently into one calendar year, so it makes
sense to plan for a trough in profitability some time in 2010.  Meetings with
company management teams can throw little light on the timing of the
inevitable recovery.  Instead, the focus has to be on attempting to assess
whether the businesses will be around to benefit from the upturn.  Scope to
cut costs and balance sheet resilience, preferably to the extent of having net
cash, are therefore crucial.

Also important is the concept of being `paid to wait'.  Given the uncertain
duration of the downturn, investors can be rewarded for their faith in a
company through the consistent payment of a dividend.  Dividend yields have
accounted for the majority of the real return from UK equities of around 5.1%
over the long term.  High yields presently abound in the small company
universe, with the average from the HGSC (XIC) being 5.9%, the first time that
it has exceeded the yield on ten year gilts since 1974.  Some of these yields
will prove illusory as cuts to underlying dividends are made.  It is a focus
for your Managers at the current time to minimise the effects of such
reductions, and to persuade company boards that cuts motivated by fashion, or
by the argument that the market expects double-digit yields to be cut, are
unacceptable.

The historic yield from ASCoT's portfolio at the year end was 5.3%.  In
planning for 2009, your Managers have anticipated a number of dividend cuts.
Importantly, the portfolio is not reliant on a small number of particularly
high yielding companies to generate its income: double-digit yielders on a
forecast basis account for less than 4% of the portfolio, while 38% is
invested in companies with forecast yields between 2.5% and 5%.  Another 15%
of ASCoT's portfolio is represented by companies that do not currently pay a
dividend. With the top ten income contributors accounting for less than 30% of
total forecast income for 2009, your Managers are hopeful that ASCoT's
dividend experience may prove relatively resilient in what will be a very
difficult year.

Equity market valuations are presently very low against government bonds and
against their own history.  The FTSE All-Share ended 2008 valued on a yield of
4.5% and a PE of 7.3x.  Valuations in the small company world are more
extreme.  At 6.4x, the historic PE ratio is back to the levels of the early
1980s.  The average PE over the last 30 years, a period covering two other
recessions, has been almost 13x.  So, profits could halve and equities would
still look reasonably valued against their history.  The other dimension to
take into account is recovery: the stockmarket will anticipate a pick-up
before profits themselves start to grow.  Thus it can take stocks to high
multiples of depressed historic earnings.  A relevant example is 1993, when
the HGSC (XIC) rose by almost 42%, moving the historic PE up to over 18x,
despite earnings continuing to fall in that year.


                             31 December          31 December
                                 2008                 2007
Characteristics             ASCoT  Benchmark    ASCoT    Benchmark
Number of Companies         93     495          100      509
Weighted Average Market     £259m  £442m        £439m    £577m
Capitalisation
Price Earnings Ratio        6.0x    6.4x        13.1x    11.7x
(Historic)
Net Dividend Yield          5.3%    5.9%        2.6%     2.9%
(Historic)
Dividend Cover (Historic)   3.1x    2.6x        2.9x     2.9x



As the table above demonstrates, the portfolio offers better value than the
HGSC (XIC).  Perhaps the most notable aspect of its valuation is that it could
quite easily have been brought down further had your Managers not chosen to
eschew a grouping of often sizeable companies within the benchmark that trade
on exceptionally low multiples, driven by high levels of debt and substantial
defined benefit pension schemes.  At some point it will be appropriate to
embrace these highly geared businesses, but with the trading environment still
under pressure it seems appropriate not to pursue both operational and
financial gearing.  Another indication of value within the portfolio comes
from its average EV/EBIT multiple, a measure used in the context of corporate
activity.  At 5.6x, it is at a significant discount to the multiples of around
15x at which deals were being done earlier in the year.  To be fair such
levels of valuation may be considered an aberration, born of an M&A culture
that had become too reliant on cheap and freely available debt.  Nevertheless,
the portfolio stands at a significant discount to the longer run average of
around 10x that has been more typical over ASCoT's lifetime.  So, when the M&A
market opens again, your Managers are confident that ASCoT can benefit.

To state the obvious, to a value investor at least, the probability of
securing a good return from equities over the medium term is increased when
starting from depressed valuations.  Your Managers are thus optimistic on the
basis of prevailing valuations but acknowledge that stockmarkets can overshoot
in either direction.  Therefore, the duration of the present bear market is
tough to call.  That said, sentiment can turn remarkably swiftly once there is
the whiff of recovery in the air.  Timing that change in sentiment to the
month or even the quarter requires a large dose of luck.  Accordingly, given
the characteristics of the small company universe, it is necessary to start
positioning the portfolio early.  This pragmatism was an important motivation
in ASCoT's decision to deploy a modest amount of gearing earlier in the year
and, indeed, in the more recent cautious reorientation of the portfolio to
domestic cyclical sectors.  There is, however, a balance to be struck.  Strong
balance sheets and a conservatively structured income profile afford ASCoT
resilience, which allows it to look beyond the short term and be in a position
to benefit from the upturn when it comes.

Aberforth Partners LLP
Managers
27 January 2009



DIRECTORS' RESPONSIBILITY STATEMENT

Each of the Directors confirm to the best of their knowledge that:

(a) the financial statements, which have been prepared in accordance with
applicable accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company; and

(b) the Annual Report includes a fair review of the development and performance
of the business and the position of the Company, together with a description of
the principal risks and uncertainties it they faces.

On behalf of the Board
David R Shaw
Chairman
27 January 2009



PORTFOLIO INFORMATION
Thirty Largest Investments
                     Valuation    % of
                         as at   Total
                   31 December     Net
                          2008  Assets  Business Activity
No Company               £'000
1  Hiscox               18,065     4.3  Insurance
2  Greggs               16,836     4.0  Retailer of sandwiches, savouries and
                                             other bakery products
3  Hampson Industries   16,496     3.9  Aerospace and automotive
4  Robert Wiseman       11,919     2.8  Processing and distribution of milk
   Dairies
5  Beazley Group        11,696     2.8  Insurance
6  e2v technologies     11,607     2.7  Manufacture of electronic components
                                             and sub-systems
7  Domino Printing      11,454     2.7  Manufacture of industrial printing
   Sciences                                  equipment
8  BSS Group            11,144     2.6  Distribution of plumbing supplies & tools
9  Brown (N.) Group      9,874     2.3  Home shopping catalogue retailer
10 RPC Group             9,325     2.2  Manufacture of rigid plastic
                                             packaging
Top Ten Investments    128,416    30.3

11 Spectris              9,210     2.2  Manufacture of precision
                                             instrumentation and controls
12 Delta                 9,133     2.2  Galvanising, manganese products and
                                             industrial supplies
13 Wilmington Group      9,040     2.1  B2B publishing and training
14 Spirax-Sarco          8,795     2.1  Engineering
   Engineering
15 Interserve            8,745     2.1  Facilities, project & equipment services
16 Phoenix IT Group      8,662     2.0  IT services
17 Axis-Shield           8,433     2.0  in-vitro diagnostic testing
18 Halfords Group        8,388     2.0  Retailer of auto, leisure and
                                             cycling products
19 Anite                 8,080     1.9  Software and related services
20 CSR                   7,544     7.8  Fabless semiconductors

Top Twenty Investments 214,446    50.7

21 Kofax                 7,383     1.7  Software and related services
22 Bellway               7,377     1.7  Housebuilder
23 RM                    7,352     1.7  IT services for schools
24 Keller Group          7,274     1.7  Ground and foundation engineer
25 Headlam Group         6,759     1.6  Distribution of floorcoverings
26 Collins Stewart       6,647     1.6  Stockbroker and private client fund manager
27 Holidaybreak          6,569     1.6  Holiday, travel and educational services
28 Evolution Group       6,474     1.5  Stockbroker and private client fund manager
29 Communisis            6,341     1.5  Marketing communication services
30 Shanks Group          6,089     1.4  Waste management

Top Thirty Investments 282,711    66.7

Other Investments (63) 181,716    42.8

Total Investments      464,427   109.5

Net Current            (40,312)   (9.5)
   Liabilities
Total Net Assets       424,115   100.0


The Income Statement, Balance Sheet, Reconciliation of Movements in Shareholders' Funds and summary
Cash Flow Statement are set out below:-

INCOME STATEMENT
For the Year ended 31 December 2008
(audited)


                                  12 months to               12 months to
                               31 December 2008           31 December 2007
                          Revenue    Capital     Total   Revenue   Capital    Total
                            £ 000      £ 000     £ 000     £ 000     £ 000    £ 000

 Realised (losses)/gains        -     (9,027)   (9,027)        -   111,634  111,634
 on sales
 Decrease in fair value         -   (297,703) (297,703)        -  (209,320)(209,320)
                           ------    -------   -------    ------   -------   ------
 Net losses on investments      -   (306,730) (306,730)        -   (97,686) (97,686)
 Dividend income           23,684      7,387    31,071    19,477       877   20,354
 Interest income            1,152          -     1,152       258         -      258
 Other income                  54          -        54        15         -       15
 Investment management     (1,636)    (2,727)   (4,363)   (1,094)   (1,823)  (2,917)
 fee
 Other expenses              (489)    (2,880)   (3,369)     (438)   (4,052)  (4,490)
                           ------    -------   -------    ------   -------   ------
 Return on ordinary        22,765   (304,950) (282,185)   18,218  (102,684) (84,466)
 activities before finance
 costs and tax
 Finance costs              (526)       (877)   (1,403)      (60)      (99)    (159)
                           ------    -------   -------    ------   -------    -----
 Return on ordinary        22,239   (305,827) (283,588)   18,158  (102,783) (84,625)
 activities before
 tax
 Tax on ordinary activities   (16)         -       (16)        -         -        -
                           ------    -------   -------    ------   -------   ------
 Return attributable to
 equity shareholders       22,223   (305,827) (283,604)   18,158  (102,783) (84,625)
                           ======    =======   =======    ======   =======   ======

 Returns per Ordinary      22.75p   (313.12p) (290.37p)   18.38p  (104.03p) (85.65p)
 Share

The Board declared on 27 January 2009 a second interim dividend of 13.0p per Ordinary Share (2007 - 10.5p). The Board
also declared on 18 July 2008 a first interim dividend of 6.0p per Ordinary Share
(2007 interim dividend of 4.7p).


NOTES
1.  The total column of this statement is the profit and loss account of the Company.  All revenue and capital items in
the above statement derive from continuing operations.  No operations were acquired or discontinued in the period. A
Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been
reflected in the above statement.

2.  The calculations of revenue return per Ordinary Share are based on net revenue of £22,223,000 (2007 - £18,158,000)
and on Ordinary Shares of 97,670,037 (2007 - 98,809,788).

The calculations of capital return per Ordinary Share are based on net capital losses of £305,827,000 (2007 - net
capital losses of £102,783,000) and on Ordinary Shares of 97,670,037 (2007 - 98,809,788).

3.  The 2008 investment management fee expense incorporates the repayment of VAT paid on investment management fees
amounting to £707,000 (2007 - £4,689,000), of which £265,000 (2007 - £1,758,000) has been credited to revenue and
£442,000 (2007 - £2,931,000) has been credited to capital.


SUMMARY RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2008
(audited)


                                                2008          2007
                                               £ 000         £ 000

 Opening shareholders' funds                 735,021       833,331
 Return on ordinary activities after        (283,604)      (84,625)
 taxation
 Equity dividends paid                       (16,189)      (13,685)
 Purchase of Ordinary Shares                 (11,113)            -
                                            --------      --------
 Closing shareholders' funds                 424,115       735,021
                                             =======       =======


NOTES
1.  The movements in this statement represent the profit and loss of the Company and the equity dividends paid.


BALANCE SHEET
As at 31 December 2008
(audited)

                                         31 December   31 December
                                                2008          2007
                                               £ 000         £ 000
 Fixed assets:
 Investments at fair value through           464,427       710,966
 profit or loss
                                            --------      --------
 Current assets
 Debtors                                       2,278         6,354
 Cash at bank                                      -        18,018
                                            --------      --------
                                               2,278        24,372
 Creditors (amounts falling due              (42,590)         (317)
 within one year)
                                            --------      --------
 Net current assets                          (40,312)       24,055
                                            --------      --------
 Total Net Assets                            424,115       735,021
                                             =======       =======

 Capital and reserves: equity interests
   Called up share capital (Ordinary Shares)     969           988
 Reserves:
   Capital redemption reserve                     19             -
   Special reserve                           186,192       197,305
   Capital reserve                           198,224       504,051
   Revenue reserve                            38,711        32,677
                                            --------      --------
 Total Shareholders' Funds                   424,115       735,021
                                             =======       =======

 Net Asset Value per Ordinary Share          437.68p       743.87p

NOTES
As at 31 December 2008, the Company had 96,900,000 Ordinary Shares (2007 - 98,809,788). During the year, the Company
bought in and cancelled 1,909,788 shares (2007: nil) at a total cost of £11,113,000 (2007: nil). No further shares have
been bought back for cancellation between 31 December 2008 and 27 January 2009.



SUMMARY CASH FLOW STATEMENT

For the year ended 31 December 2008
(audited)
                                       12 months to       12 months to
                                    31 December 2008   31 December 2007
                                       £ 000    £ 000    £ 000    £ 000

 Net cash inflow from operating                31,520            12,296
 activities
 Taxation                                         (16)                -
 Returns on investment and                     (1,381)             (152)
 servicing of finance

 Capital expenditure and
 financial investment
 Payments to acquire investments    (260,020)         (311,732)
 Receipts from sales of              198,007           300,737
 investments
                                    --------           -------
 Net cash outflow from capital
   expenditure and financial investment      (62,013)           (10,995)
                                             --------           -------
                                             (31,890)             1,149
 Equity dividends paid                       (16,189)           (13,685)
                                             --------           -------
                                             (48,079)           (12,536)
 Financing
 Purchase of Ordinary Shares                 (11,113)                 -
                                             --------           -------
 Decrease in cash                            (59,192)           (12,536)
                                             ========           =======


 NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING STANDARDS
The financial statements have been prepared under the historical cost convention, as modified to include the revaluation
of investments and in accordance with applicable accounting standards and the AIC's Statement of Recommended Practice
"Financial  Statements of Investment Trust Companies and Venture Capital Trust" issued in January 2009. The total column
of the Income Statement is the profit and loss account of the Company. All revenue and capital items in the Income
Statement are derived from continuing operations. No operations were acquired or discontinued in the period.
The same accounting policies used for the year ended 31 December 2007 have been applied.


 2. INVESTMENT MANAGEMENT FEE

 For the year to 31 December 2008     Revenue   Capital   Total
                                        £ 000     £ 000   £ 000
 Investment management fee              1,901     3,169   5,070
 VAT paid thereon                           -         -       -
 VAT refund                              (265)     (442)   (707)
                                       ------    ------  ------
 Total for the year to 31 December      1,636     2,727   4,363
 2008
                                       ======    ======  ======

 For the year to 31 December 2007     Revenue   Capital   Total
                                        £ 000     £ 000   £ 000
 Investment management fee              2,516     4,194   6,710
 VAT paid thereon                         336       560     896
 VAT recoverable                       (1,758)   (2,931) (4,689)
                                       ------    ------  ------
 Total for the year to 31 December      1,094     1,823   2,917
 2007
                                       ======    ======  ======

 The VAT recovered during the year to 31 December 2008 above represents the repayment of VAT incurred in respect of
management fees paid between 1991 and 1996.

The VAT recoverable recognised during the year to 31 December 2007 above represents the repayment of all VAT paid on
investment management fees since 1 January 2001 (including all VAT previously offset by the Managers).

3.DIVIDENDS
                                                      Year to                Year to
                                             31 December 2008       31 December 2007
                                                         £000                   £000
Amounts recognised as distributions to
equity holders in the period:
Second interim dividend of 10.50p for the year ended   10,375                  9,041
31 December 2007 (2006: 9.15p)
First interim dividend of 6.00p for the year            5,814                  4,644
ended 31 December 2008 (2007: 4.70p)
                                                      -------                 ------
                                                       16,189                 13,685
                                                       ======                 ======
The second interim dividend of 13.0p will be paid on 27 February 2009 to shareholders on the register on 6 February
2009.

4. RETURNS PER ORDINARY SHARE

The returns per Ordinary Share are based on:
                                                     Year to                 Year to
                                            31 December 2008        31 December 2007
                                                        £000                       £000
Returns attributable to Ordinary Shareholders       (283,604)                (84,625)

Weighted average number of shares in
issue during the period                           97,670,037              98,809,788



5. NET ASSET VALUES
The net assets and the net asset value per share attributable to the Ordinary Shares at each period end are calculated
in accordance with their entitlements in the Articles of Association and were as follows:

                                                 31 December             31 December
                                                        2008                    2007
                                                        £000                    £000
Net assets attributable                              424,115                 735,021

                                                       Pence                   Pence
Net asset value attributable per Ordinary Share       437.68                  743.87

As at 31 December 2008, the Company had 96,900,000 Ordinary Shares in issue (31 December 2007 - 98,809,788). During the
year to 31 December 2008, the Company bought in and cancelled 1,909,788
shares at a total cost of £11,113,000.

6. FURTHER INFORMATION
The foregoing do not comprise statutory accounts (as defined in section 240(5) of the Companies Act 1985) of the
Company.  The statutory accounts for the year to 31 December 2007, which contained an unqualified Report of the Auditors
under section 235 of the Companies Act, have been lodged with the Registrar of Companies and did not contain a statement
required under section 237(2) or (3) of the Companies Act 1985.

Certain statements in this announcement are forward looking statements. By their nature, forward looking statements
involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially
from those expressed or implied by those statements. Forward looking statements regarding past trends or activities
should not be taken as representation that such trends or activities will continue in the future. Accordingly, undue
reliance should not be placed on forward looking statements.


CONTACT:     David Ross/Alistair Whyte, Aberforth Partners LLP, 0131 220 0733

Aberforth Partners LLP, Secretaries - 27 January 2009

ANNOUNCEMENT ENDS